Economy is in the tank, banks are reeling, inflation is sky-high and there's more Biden isn't telling you

[candide]

52 minutes ago, nauseus said:

The debt was not increased - the "fight" against the consequences of a major crisis was still ongoing.

 

Yes, I know about the debt calculations. Thanks.

You know about it but you don't apply it

From your post: "it was up about 6.2  trillion" 

[placeholder]

4 hours ago, nauseus said:

Whatever. the effect was the same.

Nonsense. The gold standard was actually hurting the US economy. You subscribe to the logical fallacy known as "Post hoc ergo propter hoc"  which translates to "After this therefore because of this". Exactly what is the mechanism whereby fully abandoning the gold standard led to the relative decline of the US economy?

Edited April 10, 2023 by placeholder

[nigelforbes]

10 hours ago, nauseus said:

It would be difficult to achieve now but most of the USD decline has occurred since the end of Bretton Woods.

Agreed. Eliminating the gold standard also removed the constraints and limitation that were an alternative to self control.

 

"Liaquat Ahamed, a professional investment manager and author of the Pulitzer prize winner, “Lords of Finance: The Bankers Who Broke the World,” states in his book that the break with gold was mostly responsible for pulling the nation out of the Great Depression. It allowed the U.S. government to adjust the supply of money in the economy and influence interest rates. In later years, Nixon’s announcement also stopped dollar-rich foreigners from emptying the nation’s gold reserves.

But other side effects of moving away from the gold standard are arguably not as great. Because currency isn’t backed by gold, it’s much easier to print and borrow money, which might explain why the U.S. debt is $22.8 trillion (as of 2019). More dollars in the economy also creates inflation and cheapens the dollar’s value. When dollars don’t stretch as far as they used to, it’s the nation’s poorest who struggle the most to survive and make ends meet".

 

https://saltlending.com/the-dollar-going-off-the-gold-standard-what-does-that-mean/

 

 

[heybruce]

38 minutes ago, placeholder said:

Nonsense. The gold standard was actually hurting the US economy. You subscribe to the logical fallacy known as "Post hoc ergo propter hoc"  which translates to "After this therefore because of this". Exactly what is the mechanism whereby fully abandoning the gold standard led to the relative decline of the US economy?

Gold is a mystical metal from ancient times.  You can't eat it, build with it or wear it (except as an ornament), but it's shiny!

 

Gold is valuable because people value gold.  While the dollar is valuable because, um, well pretty much the same.

 

Currency exists to facilitate the exchange of goods and services.  A well managed paper or electronic currency does this much better than a metal.  But some people just can't get past their fascination with a heavy shiny metal.

[heybruce]

8 minutes ago, nigelforbes said:

Agreed. Eliminating the gold standard also removed the constraints and limitation that were an alternative to self control.

 

"Liaquat Ahamed, a professional investment manager and author of the Pulitzer prize winner, “Lords of Finance: The Bankers Who Broke the World,” states in his book that the break with gold was mostly responsible for pulling the nation out of the Great Depression. It allowed the U.S. government to adjust the supply of money in the economy and influence interest rates. In later years, Nixon’s announcement also stopped dollar-rich foreigners from emptying the nation’s gold reserves.

But other side effects of moving away from the gold standard are arguably not as great. Because currency isn’t backed by gold, it’s much easier to print and borrow money, which might explain why the U.S. debt is $22.8 trillion (as of 2019). More dollars in the economy also creates inflation and cheapens the dollar’s value. When dollars don’t stretch as far as they used to, it’s the nation’s poorest who struggle the most to survive and make ends meet".

 

https://saltlending.com/the-dollar-going-off-the-gold-standard-what-does-that-mean/

 

 

Consider the alternative.  It is difficult for an economy to grow faster than its money supply.  About two thirds of the gold in the world has been mined since 1950, so the global gold supply is now three times what it was then.  https://www.gold.org/goldhub/data/how-much-gold

 

However the global economy over 80 times as large now as it was in 1960.  https://www.macrotrends.net/countries/WLD/world/gdp-gross-domestic-product

 

If the world had stuck with the gold standard, it would be a much, much poorer place than it is now.

[nigelforbes]

1 minute ago, heybruce said:

Consider the alternative.  It is difficult for an economy to grow faster than its money supply.  About two thirds of the gold in the world has been mined since 1950, so the global gold supply is now three times what it was then.  https://www.gold.org/goldhub/data/how-much-gold

 

However the global economy over 80 times as large now as it was in 1960.  https://www.macrotrends.net/countries/WLD/world/gdp-gross-domestic-product

 

If the world had stuck with the gold standard, it would be a much, much poorer place than it is now.

Yes I agree. I think the point is that not enough thought was given at the time to the downside risks of abandoning the gold standard which some argue should be reintroduced (impossibly I think). Perhaps if enough thought had been given one  potential solution such as a migratory path might have been developed. The risk of dollar dominance in lieu of gold was also not reacted to soon enough, the dollar has already been debased and is now dragging other currencies down with it. This is a problem that should have been addressed or at least planned for, two or three decades ago.

[heybruce]

19 minutes ago, nigelforbes said:

Yes I agree. I think the point is that not enough thought was given at the time to the downside risks of abandoning the gold standard which some argue should be reintroduced (impossibly I think). Perhaps if enough thought had been given one  potential solution such as a migratory path might have been developed. The risk of dollar dominance in lieu of gold was also not reacted to soon enough, the dollar has already been debased and is now dragging other currencies down with it. This is a problem that should have been addressed or at least planned for, two or three decades ago.

You have a point, but I'm not sure how much advance planning was possible given the unknowns at the time.  My point is that, while there are definitely risks and disadvantages to moving away for precious metal based currencies, the benefits far outweigh those issues.

Edited April 10, 2023 by heybruce

[nauseus]

6 hours ago, candide said:

You know about it but you don't apply it

From your post: "it was up about 6.2  trillion" 

Why don't you check the numbers?

[nauseus]

2 hours ago, placeholder said:

Nonsense. The gold standard was actually hurting the US economy. You subscribe to the logical fallacy known as "Post hoc ergo propter hoc"  which translates to "After this therefore because of this". Exactly what is the mechanism whereby fully abandoning the gold standard led to the relative decline of the US economy?

The decline of the dollar.

[nauseus]

2 hours ago, heybruce said:

Gold is a mystical metal from ancient times.  You can't eat it, build with it or wear it (except as an ornament), but it's shiny!

 

Gold is valuable because people value gold.  While the dollar is valuable because, um, well pretty much the same.

 

Currency exists to facilitate the exchange of goods and services.  A well managed paper or electronic currency does this much better than a metal.  But some people just can't get past their fascination with a heavy shiny metal.

Well this mystical metal from ancient times is still money, which has survived as such for far longer than any paper - well managed or not.

.

[placeholder]

22 minutes ago, nauseus said:

The decline of the dollar.

Well, protecting the dollar was precisely why Bretton Woods was abandoned. It was noted that foreign government were taking advantage of Bretton Woods to use their dollars to buy gold from the US reserves. It was feared that this influx of dollars into the U.S. economy would lead to inflation. That would lessen the value of the dollar.

 

And this whole notion of the relative decline of the dollar being somehow due to the abandonment of the gold standard under Bretton Woods is a very strange one. As the European and Japanese economies recovered from WW2, it was virtually inevitable, unless they were terribly managed economically, that their economies would grow faster than the US's. So naturally their currencies should have gained in value with respect to the dollar. And they did.

 

[placeholder]

3 hours ago, nigelforbes said:

Agreed. Eliminating the gold standard also removed the constraints and limitation that were an alternative to self control.

 

"Liaquat Ahamed, a professional investment manager and author of the Pulitzer prize winner, “Lords of Finance: The Bankers Who Broke the World,” states in his book that the break with gold was mostly responsible for pulling the nation out of the Great Depression. It allowed the U.S. government to adjust the supply of money in the economy and influence interest rates. In later years, Nixon’s announcement also stopped dollar-rich foreigners from emptying the nation’s gold reserves.

But other side effects of moving away from the gold standard are arguably not as great. Because currency isn’t backed by gold, it’s much easier to print and borrow money, which might explain why the U.S. debt is $22.8 trillion (as of 2019). More dollars in the economy also creates inflation and cheapens the dollar’s value. When dollars don’t stretch as far as they used to, it’s the nation’s poorest who struggle the most to survive and make ends meet".

 

https://saltlending.com/the-dollar-going-off-the-gold-standard-what-does-that-mean/

 

 

First off, the assertion that Nixon's move to get off the gold standard because of dollar-rich foreigners isn't true. Unless you're calling foreign governments "dollar rich foreigners." Private citizens were not allowed to purchase gold from US reserves whether they were foreigners or US citizens. That ended in 1933.

 

As for the decline in the dollar's value affecting the poorest, this is untrue. What matters is not the value of the individual dollar but how many dollars someone has and their purchasing power. For instance if someone was once earning $10,000 but is now earning $30,000 but the dollar has declined in purchasing power by 50%, are they better off then they were before or worse off? The answer is obvious.

 

And of course the dollar's value in relation to other currencies has some effect on people's purchasing power since imports become more expensive, but that effect is hardy 1 to 1 since imports constitute don't have nearly a 1 to 1 effect on costs of items in the USA.

[heybruce]

3 hours ago, nauseus said:

Well this mystical metal from ancient times is still money, which has survived as such for far longer than any paper - well managed or not.

.

Really?  Where is gold currently being used as money? 

 

As already noted, it is difficult for an economy to grow faster than its money supply, and the global supply of gold has not come close to keeping up with the growth of the global economy.  In other words, if we'd stuck with the gold standard we'd all be a lot poorer.

[candide]

4 hours ago, nauseus said:

Why don't you check the numbers?

The numbers are in the link I posted before. As you can see the total is not 6.2 trillion.

FY 2021: $1.5 trillion

FY 2020: $4.2 trillion

FY 2019: $1.2 trillion

FY 2018: $1.3 trillion

https://www.thebalancemoney.com/us-debt-by-president-by-dollar-and-percent-3306296

Edited April 11, 2023 by candide

[candide]

Error

Edited April 11, 2023 by candide

[thaibeachlovers]

19 hours ago, amexpat said:

Yes Biden is not helping me feel warm and friendly with the goons who smeared sh*t on my nation's capitol, tried to kidnap and murder elected representatives, maimed capitol police and killed one, etc.  
How would you unite us? 

The way Clinton did after his escapade with cigars in strange places and co operated with the GOP.

[thaibeachlovers]

19 hours ago, amexpat said:

Yes Biden is not helping me feel warm and friendly with the goons who smeared sh*t on my nation's capitol, tried to kidnap and murder elected representatives, maimed capitol police and killed one, etc.  
How would you unite us? 

The way Clinton did after his escapade with cigars in strange places and co operated with the GOP.

[amexpat]

27 minutes ago, thaibeachlovers said:

The way Clinton did after his escapade with cigars in strange places and co operated with the GOP.

Yeah, totally equivalent. 

 

[nauseus]

3 hours ago, heybruce said:

Really?  Where is gold currently being used as money? 

 

As already noted, it is difficult for an economy to grow faster than its money supply, and the global supply of gold has not come close to keeping up with the growth of the global economy.  In other words, if we'd stuck with the gold standard we'd all be a lot poorer.

It can be used pretty much anywhere. The sub-topic was dollar decline and causes - not economic growth.

 

If the gold price was to keep fair value, instead of the price being suppressed, then it could be used to back future alternate currencies.

[ozimoron]

The rational behind dropping the gold standard was that central banks need to be able to print money to stimulate the economy during times of recession and reduce the money supply during good times. This is what happens and happens all around the world. The right wing armchair economists seem to forget that every single central bank in the world does this. I guess the wing nuts are right and all the world's economists are wrong, just like climate change scientists.

[heybruce]

33 minutes ago, nauseus said:

It can be used pretty much anywhere. The sub-topic was dollar decline and causes - not economic growth.

 

If the gold price was to keep fair value, instead of the price being suppressed, then it could be used to back future alternate currencies.

Do you understand what I mean when I state that an economy has difficulty growing faster than the money supply?  Do you understand that just as too much money chasing too few goods causes inflation, too many goods competing after too little money causes deflation?  That when this happens people have no incentive to invest in anything other than gold, causing an economy to freeze up?  Do you understand that an economy freezing up is a very bad thing?

 

One of the big drivers of the Great Depression in the 1930's was production exceeding the fixed money supplies.   Before World War One much of the world's production capacity was in Europe.  The war shut much of that down.  During the war other parts of the world ramped up production to compensate.  These new producers kept producing after the war ended and the European producers started producing again.  Total global production increased dramatically, however with currencies fixed by the gold standard the money supply couldn't be increased to accommodate.  Prices plummeted below the cost of production forcing producers out of business.  It was very bad.  That's why countries left the gold standard.

 

If all this is beyond your grasp, you shouldn't be commenting here.

 

BTW:  The price of gold isn't being suppressed, it floats freely.  If you think gold is better than money, then by all means buy gold.  Nobody is stopping you.

[nauseus]

1 hour ago, heybruce said:

Do you understand what I mean when I state that an economy has difficulty growing faster than the money supply?  Do you understand that just as too much money chasing too few goods causes inflation, too many goods competing after too little money causes deflation?  That when this happens people have no incentive to invest in anything other than gold, causing an economy to freeze up?  Do you understand that an economy freezing up is a very bad thing?

 

One of the big drivers of the Great Depression in the 1930's was production exceeding the fixed money supplies.   Before World War One much of the world's production capacity was in Europe.  The war shut much of that down.  During the war other parts of the world ramped up production to compensate.  These new producers kept producing after the war ended and the European producers started producing again.  Total global production increased dramatically, however with currencies fixed by the gold standard the money supply couldn't be increased to accommodate.  Prices plummeted below the cost of production forcing producers out of business.  It was very bad.  That's why countries left the gold standard.

 

If all this is beyond your grasp, you shouldn't be commenting here.

 

BTW:  The price of gold isn't being suppressed, it floats freely.  If you think gold is better than money, then by all means buy gold.  Nobody is stopping you.

I understand everything you say but don't agree with a lot of it and certainly don't care for you patronizing remark. Most fiat currencies today have nothing to back them, except the word of increasingly untrustworthy governments. The US has been fortunate to have the Dollar as the world reserve currency for 70 years but that seems to be about to change soon.

 

The link between paper currencies and gold could be adjusted to fit with the gold reserves available, that could back them at a practical, and not necessarily fixed, level. I see something like that as better than nothing.

 

Of course I disagree about the gold price suppression - there are several big banks that have interests in keeping the price down and at the moment they are able to mostly control the price. However, I so think that your "free-floating" phase may be just around the corner. Gold is real money so I do have an interest in it.

 

 

 

 

 

  

Edited April 11, 2023 by nauseus

[placeholder]

5 minutes ago, nauseus said:

The link between paper currencies and gold could be adjusted to fit with the gold reserves available, that could back them at a practical, and not necessarily fixed, level. I see something like that as better than nothing.

Whatever it is you're proposing here, and it looks incoherent, it certainly doesn't resemble a genuine gold standard.

[Presnock]

On 4/7/2023 at 6:26 AM, thaibeachlovers said:

I disagree that that is a bad thing. IMO house prices should fall by a great deal, so ordinary people have a shot at owning a home without mortgaging their future. If people paid too much for theirs, that's down to them thinking nothing would change. Many have been aware that cheap loans would not last forever, but some thought they knew better, apparently.

 

I doubt any government that wants to get re elected is going to tell the truth about a sagging economy, and Trump makes a convenient scapegoat, despite the economy apparently doing well on his watch.

yea. but he did't do anything about the pandemic upsurge which trashed the world economy together

with the Russian invasion of Ukraine.  Trump and his lies together with most of the Republican Party

are destroying democracy in the US.  I hate Democrats even more as it seems ALL politicians want

to do is work towards re-election because stupid voters will keep them drawing a Govt check without

having to fix any of the nation's problems.  Biden and Trump both need to get lost and a younger

generation maybe won't be so corrupt.  My opinion only based on too many years of seeing the same

useless politicians re-elected over and over.

 

 

[nauseus]

20 minutes ago, placeholder said:

Whatever it is you're proposing here, and it looks incoherent, it certainly doesn't resemble a genuine gold standard.

As I said before, it's far too late to revert to the former "standard" but some kind of backing might be doable.

[ozimoron]

Just now, nauseus said:

As I said before, it's far too late to revert to the former "standard" but some kind of backing might be doable.

If fiat currencies fail we will have more problems to worry about than money. No currency in a developed nation has failed since the Weimar crisis in 1923 in Germany. 

[nauseus]

36 minutes ago, ozimoron said:

If fiat currencies fail we will have more problems to worry about than money. No currency in a developed nation has failed since the Weimar crisis in 1923 in Germany. 

But that's another story......

[heybruce]

1 hour ago, nauseus said:

I understand everything you say but don't agree with a lot of it and certainly don't care for you patronizing remark. Most fiat currencies today have nothing to back them, except the word of increasingly untrustworthy governments. The US has been fortunate to have the Dollar as the world reserve currency for 70 years but that seems to be about to change soon.

 

The link between paper currencies and gold could be adjusted to fit with the gold reserves available, that could back them at a practical, and not necessarily fixed, level. I see something like that as better than nothing.

 

Of course I disagree about the gold price suppression - there are several big banks that have interests in keeping the price down and at the moment they are able to mostly control the price. However, I so think that your "free-floating" phase may be just around the corner. Gold is real money so I do have an interest in it.

Clearly you don't understand what I wrote.  You also ignored or didn't understand my post that pointed out that the world economy has grown at a rate many times that of the gold supply, something which would be impossible if currencies were tied to the gold supply.

 

Size and responsible economic policy has led the US dollar to being the world reserve currency.  The US attempts to manage its money supply to keep it appropriate for the demand on the currency, and largely succeeds.  All responsible countries do this, which is why the currencies of responsible countries are easily exchanged for other currencies around the world.

 

Money is both a tool to facilitate commerce and a commodity subject to supply and demand.  When a country mismanages the currency supply that country's currency, economy or both will crash.  History has shown that repeatedly.

 

What kind of linkage to gold supply do you suggest that will not restrain global economic growth to the much slower growth in global gold supplies?

 

What evidence do you have of gold price suppression?

 

Apparently you want the currencies tied to gold, and the price of gold to increase.  How does that work?  If a quarter is defined as a coin worth one quarter of a dollar, then if the value of the dollar increases so will the value of the quarter.  The same thing holds if currencies are linked to gold.  An increase in the value of gold will lead to an increase in the value of the currency which causes deflation and recession, depression, or economic collapse, depending on the magnitude of the increase.

 

Instead of throwing out nonsensical suggestions, try refuting what I've posted.

[nauseus]

2 hours ago, heybruce said:

Clearly you don't understand what I wrote.  You also ignored or didn't understand my post that pointed out that the world economy has grown at a rate many times that of the gold supply, something which would be impossible if currencies were tied to the gold supply.

 

Size and responsible economic policy has led the US dollar to being the world reserve currency.  The US attempts to manage its money supply to keep it appropriate for the demand on the currency, and largely succeeds.  All responsible countries do this, which is why the currencies of responsible countries are easily exchanged for other currencies around the world.

 

Money is both a tool to facilitate commerce and a commodity subject to supply and demand.  When a country mismanages the currency supply that country's currency, economy or both will crash.  History has shown that repeatedly.

 

What kind of linkage to gold supply do you suggest that will not restrain global economic growth to the much slower growth in global gold supplies?

 

What evidence do you have of gold price suppression?

 

Apparently you want the currencies tied to gold, and the price of gold to increase.  How does that work?  If a quarter is defined as a coin worth one quarter of a dollar, then if the value of the dollar increases so will the value of the quarter.  The same thing holds if currencies are linked to gold.  An increase in the value of gold will lead to an increase in the value of the currency which causes deflation and recession, depression, or economic collapse, depending on the magnitude of the increase.

 

Instead of throwing out nonsensical suggestions, try refuting what I've posted.

Circumstance and wars led the US dollar to being the world reserve currency. Dollar selling due to the Vietnam War spending ended the BW agreement - the gold price fix had been too low for too long. These days, responsible economic policy seems to have left the building - the dot com crash and GFC just resulted in years of easy money and then insanely low interest rates in the US. The Federal Reserve seems to be no longer fit for purpose, even if it ever was. 

 

I do not know what kind of linkage to gold might work - probably too late now - some bright spark might come up with something. 

 

What evidence do you have of gold price suppression?

https://www.reuters.com/article/jp-morgan-spoofing-penalty-idINKBN26K325

 

It's not the first time either = it looks like they just did it again last week:

https://reaction.life/he-who-has-the-gold-makes-the-rules/

 

 

 

 

 

 

[gamb00ler]

On 4/10/2023 at 9:00 PM, nauseus said:

Biden's dollar  

I'm thinking you're the only one unable to translate "Biden's dollar" to "the dollar during Biden's presidency"
OR
you're now scraping the bottom of the barrel for any criticism of the counter argument.

 

Neither explanation paints you in a flattering light.

Edited April 11, 2023 by gamb00ler